Following MF Global filing for chapter 11 bankruptcy protection this morning, the claws are coming out for the company head Jon Corzine.
Most of the blame for MF Global’s collapse has landed on Corzine – who is a former Goldman Sachs CEO – because of his decision to begin trading with the firm’s money and taking positions on risky European debt. The fall of the firm’s stock was largely triggered by MF Global’s $6.3 billion of European sovereign debt, publicized last Tuesday.
Corzine joined MF Global in March 2010 when the company was just a derivatives brokerage that made money from commissions on executing trades and interest from the cash collateral it held from clients.
Here’s a telling piece from the WSJ:
In late 2010, Mr. Corzine started making big bets on bonds issued by European countries. He sometimes placed orders himself based on a list of prices left with an assistant, according to people familiar with the situation.
The WSJ also points out carelessness on part of board members:
Mr. Corzine oversaw the European sovereign-debt trades largely on his own even after hiring a new trading chief earlier this year, a person familiar with the matter says. In one quarter where the trade worked well, it represented 12% of the firm’s revenues, according to Christopher Allen, an analyst with Evercore Partners Inc. Mr. Corzine regularly reviewed the positions with the company’s directors, and he was allowed by the board several times to increase MF Global’s exposure to Europe, these people said.
Today, Bloomberg TV reporter Dominic Chu had the chance to catch up with some MF Global traders said the MF Global employees thought Jon Corzine was to blame “100%” for the firm’s fall.
Matt McCormick of Bahl & Gaynor also told Bloomberg TV that he thought Jon Corzine was the sole person to blame for the company’s collapse, as he tried to “apply the Goldman Sachs model without the capital or the ability.”
Below is the clip from Bloomberg TV.